How a Holiday Spending Plan Can Turn Humbug to Ho Ho Ho!

The decorations, the shopping mall and, of course, all those screaming retail deals mean it is time for American consumers to start compiling their holiday shopping lists.

The challenge many consumers face when holiday gift-giving season rolls around is making sure that in opening their hearts to show appreciation for the people they care about, they do not open their wallets beyond what is financially practical. The post-holiday bills that result from generous-to-a-fault holiday gift-buying habits can be harder to stomach than a stale holiday fruitcake.

“The generosity of spirit and the feeling of joy you get in giving gifts can turn into feelings of buyer’s remorse, pain and anguish come January when you get your credit card bill,” said FPA member Charlotte Dougherty, CFP^®.

All it takes to experience the joy of giving without the post-holiday debt hangover is a little advanced planning, creativity and control over your consumer impulses.

Start by assembling a list of the people for whom you plan to give gifts, and determine a bottom-line amount of how much you can afford to spend on gifts this year. Then determine what you can spend for each gift, based on that figure.

If money’s really tight, use unique gifts to show you care and lighten the financial load in the process. “It does not have to come from the store to come from the heart,” Dougherty said. Indeed, some of the best gifts cost next to nothing. “Use your talents and your creativity to come up with homemade gifts things like baking cookies or knitting something or making a photo book or calendar for someone.”

When you start shopping, have the list and budget in hand, and stick to it. Track each gift you purchase, including the extent to which it exceeded or fell beneath the budgeted amount.

Just say no to impulse buys and plastic. Those amazing holiday deals are difficult to resist, especially if you are armed with a credit card. But resist because the credit card finance charges you will incur from an impulsive gift-buying binge are a gift that will keep giving (headaches) well into the New Year. Dougherty’s advice: “Use a debit card or cash whenever possible and limit the amount you put on a credit card to what you can pay back right away.”

Stash money for holiday gifts in a savings account. It may be too late to begin saving for this year, but there is always next year. So start setting aside a little each month now.

Reward yourself for sticking to your holiday spending plan. As good as it feels to give, receiving is not bad either. So buy yourself something nice (but not too pricey!) for staying within budget.